CEVAPLAR. Solution: a. Given the competitive nature of the industry, Conigan should equate P to MC.
|
|
- Daisy Rich
- 8 years ago
- Views:
Transcription
1 1 I S L U Y G U L A M A L I İ K T İ S A T _ U Y G U L A M A ( 4 ) _ 9 K a s ı m CEVAPLAR 1. Conigan Box Company produces cardboard boxes that are sold in bundles of 1000 boxes. The market is highly competitive, with boxes currently selling for $100 per thousand. Conigan's total and marginal cost curves are: TC = 3,000, Q 2 MC = 0.002Q where Q is measured in thousand box bundles per year. a. Calculate Conigan's profit maximizing quantity. Is the firm earning a profit? b. Analyze Conigan's position in terms of the shutdown condition. Should Conigan operate or shut down in the short-run? Solution: a. Given the competitive nature of the industry, Conigan should equate P to MC. 100 = 0.002Q Q = 50,000 To determine profit: π = TR - TC TR = PQ TR = $100 50,000 TR = 5,000,000 TC = 3,000, (50,000) TC = 3,000, ,500,000 TC = 5,500,000 π = 5,000,000-5,500,000 π = -500,000 Conigan is losing 500,000 per year. 2
2 2 I S L U Y G U L A M A L I İ K T İ S A T _ U Y G U L A M A ( 4 ) _ 9 K a s ı m b. To determine if the firm should operate or shutdown, we must compare P to AVC. TVC AVC = Q TVC = TC - TFC TVC = 5,500,000-3,000,000 TVC = 2,500,000 2,500,000 AVC = = $50 50,000 AVC = 50; P = $100 The firm should operate since P > AVC Homer's Boat Manufacturing cost function is: C ( q) = q + 10, 240. The marginal cost function is: MC ( q) = q. If Homer can sell all the boats he 32 produces for $1,200, what is his optimal output? Calculate Homer's profit or loss. Solution: The profit maximizing output level is where the market price equals marginal cost (providing the price exceeds the average variable cost). To determine the optimal output level, we need to first equate marginal cost to the market price That is, MC ( q) = q = P = 1, 200 q = 8. The average variable cost at this ( 512) output level is: AVC ( 8) = ( 8) = = 300. Since P > AVC ( 8 ), Homer will maximize profits at 8 units. Homer's profits are: 75( 8) 4 π = Pq C ( q) = 1, 200( 8) + 10,240 = 3,040. Homer will produce and 128 make a loss as losing $3,040 is better than not producing and losing $10,240.
3 3 I S L U Y G U L A M A L I İ K T İ S A T _ U Y G U L A M A ( 4 ) _ 9 K a s ı m The market for wheat consists of 500 identical firms, each with the total and marginal cost functions shown: TC = 90, Q 2 MC = Q, where Q is measured in bushels per year. The market demand curve for wheat is Q = 90,000,000-20,000,000P, where Q is again measured in bushels and P is the price per bushel. a. Determine the short-run equilibrium price and quantity that would exist in the market. b. Calculate the profit maximizing quantity for the individual firm. Calculate the firm's short-run profit (loss) at that quantity. c. Assume that the short-run profit or loss is representative of the current long-run prospects in this market. You may further assume that there are no barriers to entry or exit in the market. Describe the expected long-run response to the conditions described in part b. (The TC function for the firm may be regarded as an economic cost function that captures all implicit and explicit costs.) Solution: a. Market supply is horizontal sum of individual firm supply (firms MC curve). Firm's TC = 90, Q 2 MC = Q = P. Solve for Q in terms of P to express as supply curve P = Q Q = 50,000P Market supply curve is horizontal sum of firm supply curve or N-times the firm supply curve (N is the number of firms). Q S = 500(50,000)P Q S = 25,000,000P
4 4 I S L U Y G U L A M A L I İ K T İ S A T _ U Y G U L A M A ( 4 ) _ 9 K a s ı m equate Q S and Q D to determine price and quantity 25,000,000P = 90,000,000-20,000,000P 45,000,000P = 90,000,000 P = $2.00 Q = 25,000,000P Q = 25,000,000(2) Q = 50,000,000 b. To determine the firm's output, equate price and marginal cost - Firm's MC = Q. P = 2 = Q Q = 100,000 Firm's π = TR - TC TR = 2.00(100,000) TR = 200,000 TC = 90, Q TC = 90, (100,000) TC = 190,000 π = 200, ,000 = 10, c. Firms are earning economic profit so we would expect entry to occur, causing the market supply curve to shift rightward. As the market supply curve shifts rightward, price falls, which in turn causes each firm to reduce its output. This will continue until we reach long-run equilibrium at zero profit.
5 5 I S L U Y G U L A M A L I İ K T İ S A T _ U Y G U L A M A ( 4 ) _ 9 K a s ı m The elected officials in a west coast university town are concerned about the "exploitative" rents being charged to college students. The town council is contemplating the imposition of a $350 per month rent ceiling on apartments in the city. An economist at the university estimates the demand and supply curves as: Q D = P Q S = P, where P = monthly rent, and Q = number of apartments available for rent. For purposes of this analysis, apartments can be treated as identical. a. Calculate the equilibrium price and quantity that would prevail without the price ceiling. Calculate producer and consumer surplus at this equilibrium (sketch a diagram showing both). b. What quantity will eventually be available if the rent ceiling is imposed? Calculate any gains or losses in consumer and/or producer surplus. c. Does the proposed rent ceiling result in net welfare gains? Would you advise the town council to implement the policy? Solution: a. To calculate equilibrium set Q D = Q S and solve for P P = P 5100 = 12P P = 425 Substitute P into Q D to solve for Q Q D = (425) Q = 2200 Q = P P = Q Q = 500 4P P = Q C.S. = area A D S D
6 6 I S L U Y G U L A M A L I İ K T İ S A T _ U Y G U L A M A ( 4 ) _ 9 K a s ı m C.S. = 0.5( ) x 2200 C.S. = 302,500 P.S. = area B P.S. = 0.5( ) x 2200 P.S. = 330,000 Sum of producer and consumer surplus is: 302, ,000 = 632,500 b. Eventually the market will settle at the quantity supplied corresponding to $350 rent. Q S = (350) Q S = 1900 Q D at P = 350 Q D = (350) = 2800 There will be a shortage of 900 apartments. Gain = Consumer surplus is area A Area A = ( ) x 1900 = 142,500
7 7 I S L U Y G U L A M A L I İ K T İ S A T _ U Y G U L A M A ( 4 ) _ 9 K a s ı m Area B = loss in consumer surplus To find area B, first find consumer reservation price corresponding to an output of P = (1900) = Difference Q = = 300 Area B = 0.5( ) x ( ) Area B = 5625 Loss in consumer surplus is c. Area C is loss in producer surplus not offset by gain in consumer surplus. Area C = 0.5( ) x ( ) Area C = 11,250 Area A is a gain in consumer surplus, but it is offset by a loss in producer surplus. The net changes are thus B (lost C.S.) and C (lost P.S.). The policy thus results in a deadweight loss. The deadweight loss = lost C.S. + lost P.S. or = 16,875. Deadweight loss = 16, Tad's bait shop has a monopoly on the bait market at Sanderson's Lake. The demand curve for bait is revenue function is: MR ( Q) D 1 = 56 8 = 7 D. 8 1 = 7. 4 Q P P Q This implies the marginal Q Tad has two employees he can use to search for bait. The marginal cost of using Amanda to search for bait is: = 8 MC ( Q ) = Q. The marginal cost of using Andrew to search for bait is: M M M MC ( Q ) Q. Determine how many units of bait each employee should N N N gather. What is the price Tad receives for selling the bait? Solution: We can think of Tad's employees as two different plants that Tad owns. We can then determine the individual plant supply and aggregate to determine Tad's total output. This is done as follows: ( ) = M + N = 4 M + N Q =. 3 1 MCM QM = QM QM = 4 MC M. 4 Also, MC ( Q ) = Q Q = MC. This implies that Tad's aggregate supply N N N N N is: Q Q Q MC MC Since marginal costs will be equivalent across plants, MC Tad's marginal cost as a function of output at both plants is:
8 8 I S L U Y G U L A M A L I İ K T İ S A T _ U Y G U L A M A ( 4 ) _ 9 K a s ı m MC ( Q) = Q. Since Tad is a monopolist, he will set marginal revenue equal 20 to marginal cost to determine optimal output. This is: MC ( Q) = Q = MR ( Q) = 7 Q Q = At this output level, Tad's marginal cost is $2.63. This means that Amanda is gathering 10.5 units of bait while Andrew gathers 7 units of bait. Tad receives $4.81 per unit of bait.
CHAPTER 10 MARKET POWER: MONOPOLY AND MONOPSONY
CHAPTER 10 MARKET POWER: MONOPOLY AND MONOPSONY EXERCISES 3. A monopolist firm faces a demand with constant elasticity of -.0. It has a constant marginal cost of $0 per unit and sets a price to maximize
More informationMULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
Practice for Perfect Competition Name MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) Which of the following is a defining characteristic of a
More information11 PERFECT COMPETITION. Chapter. Competition
Chapter 11 PERFECT COMPETITION Competition Topic: Perfect Competition 1) Perfect competition is an industry with A) a few firms producing identical goods B) a few firms producing goods that differ somewhat
More informationManagerial Economics & Business Strategy Chapter 8. Managing in Competitive, Monopolistic, and Monopolistically Competitive Markets
Managerial Economics & Business Strategy Chapter 8 Managing in Competitive, Monopolistic, and Monopolistically Competitive Markets I. Perfect Competition Overview Characteristics and profit outlook. Effect
More informationCHAPTER 8 PROFIT MAXIMIZATION AND COMPETITIVE SUPPLY
CHAPTER 8 PROFIT MAXIMIZATION AND COMPETITIVE SUPPLY TEACHING NOTES This chapter begins by explaining what we mean by a competitive market and why it makes sense to assume that firms try to maximize profit.
More information1 Monopoly Why Monopolies Arise? Monopoly is a rm that is the sole seller of a product without close substitutes. The fundamental cause of monopoly is barriers to entry: A monopoly remains the only seller
More informationMicroeconomics Topic 7: Contrast market outcomes under monopoly and competition.
Microeconomics Topic 7: Contrast market outcomes under monopoly and competition. Reference: N. Gregory Mankiw s rinciples of Microeconomics, 2 nd edition, Chapter 14 (p. 291-314) and Chapter 15 (p. 315-347).
More informationPractice Questions Week 8 Day 1
Practice Questions Week 8 Day 1 Multiple Choice Identify the choice that best completes the statement or answers the question. 1. The characteristics of a market that influence the behavior of market participants
More informationMULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
Chapter 11 Perfect Competition - Sample Questions MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) Perfect competition is an industry with A) a
More informationMULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question on the accompanying scantron.
Principles of Microeconomics, Quiz #5 Fall 2007 Name MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question on the accompanying scantron. 1) Perfect competition
More informationMarket Structure: Perfect Competition and Monopoly
WSG8 7/7/03 4:34 PM Page 113 8 Market Structure: Perfect Competition and Monopoly OVERVIEW One of the most important decisions made by a manager is how to price the firm s product. If the firm is a profit
More informationFinal Exam 15 December 2006
Eco 301 Name Final Exam 15 December 2006 120 points. Please write all answers in ink. You may use pencil and a straight edge to draw graphs. Allocate your time efficiently. Part 1 (10 points each) 1. As
More informationMULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) Firms that survive in the long run are usually those that A) remain small. B) strive for the largest
More informationMULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question on the accompanying scantron.
Principles of Microeconomics Fall 2007, Quiz #6 Name MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question on the accompanying scantron. 1) A monopoly is
More informationc. Given your answer in part (b), what do you anticipate will happen in this market in the long-run?
Perfect Competition Questions Question 1 Suppose there is a perfectly competitive industry where all the firms are identical with identical cost curves. Furthermore, suppose that a representative firm
More informationFinal Exam (Version 1) Answers
Final Exam Economics 101 Fall 2003 Wallace Final Exam (Version 1) Answers 1. The marginal revenue product equals A) total revenue divided by total product (output). B) marginal revenue divided by marginal
More informationPricing and Output Decisions: i Perfect. Managerial Economics: Economic Tools for Today s Decision Makers, 4/e By Paul Keat and Philip Young
Chapter 9 Pricing and Output Decisions: i Perfect Competition and Monopoly M i l E i E i Managerial Economics: Economic Tools for Today s Decision Makers, 4/e By Paul Keat and Philip Young Pricing and
More informationUnderstanding Economics 2nd edition by Mark Lovewell and Khoa Nguyen
Understanding Economics 2nd edition by Mark Lovewell and Khoa Nguyen Chapter 5 Perfect Competition Chapter Objectives! In this chapter you will: " Consider the four market structures, and the main differences
More informationChapter 7: The Costs of Production QUESTIONS FOR REVIEW
HW #7: Solutions QUESTIONS FOR REVIEW 8. Assume the marginal cost of production is greater than the average variable cost. Can you determine whether the average variable cost is increasing or decreasing?
More informationChapter. Perfect Competition CHAPTER IN PERSPECTIVE
Perfect Competition Chapter 10 CHAPTER IN PERSPECTIVE In Chapter 10 we study perfect competition, the market that arises when the demand for a product is large relative to the output of a single producer.
More informationProblem Set 9 (75 points)
Problem Set 9 (75 points) 1. A student argues, "If a monopolist finds a way of producing a good at lower cost, he will not lower his price. Because he is a monopolist, he will keep the price and the quantity
More informationLearning Objectives. Chapter 6. Market Structures. Market Structures (cont.) The Two Extremes: Perfect Competition and Pure Monopoly
Chapter 6 The Two Extremes: Perfect Competition and Pure Monopoly Learning Objectives List the four characteristics of a perfectly competitive market. Describe how a perfect competitor makes the decision
More informationPractice Questions Week 6 Day 1
Practice Questions Week 6 Day 1 Multiple Choice Identify the choice that best completes the statement or answers the question. 1. Economists assume that the goal of the firm is to a. maximize total revenue
More informationEXAM TWO REVIEW: A. Explicit Cost vs. Implicit Cost and Accounting Costs vs. Economic Costs:
EXAM TWO REVIEW: A. Explicit Cost vs. Implicit Cost and Accounting Costs vs. Economic Costs: Economic Cost: the monetary value of all inputs used in a particular activity or enterprise over a given period.
More informationChapter 15: Monopoly WHY MONOPOLIES ARISE HOW MONOPOLIES MAKE PRODUCTION AND PRICING DECISIONS
Chapter 15: While a competitive firm is a taker, a monopoly firm is a maker. A firm is considered a monopoly if... it is the sole seller of its product. its product does not have close substitutes. The
More informationChapter 6 Competitive Markets
Chapter 6 Competitive Markets After reading Chapter 6, COMPETITIVE MARKETS, you should be able to: List and explain the characteristics of Perfect Competition and Monopolistic Competition Explain why a
More informationEconomics 10: Problem Set 3 (With Answers)
Economics 1: Problem Set 3 (With Answers) 1. Assume you own a bookstore that has the following cost and revenue information for last year: - gross revenue from sales $1, - cost of inventory 4, - wages
More information22 COMPETITIVE MARKETS IN THE LONG-RUN
22 COMPETITIVE MARKETS IN THE LONG-RUN Purpose: To illustrate price determination in the long-run in a competitive market. Computer file: lrmkt198.xls Instructions and background information: You are a
More informationMULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
Economics 103 Spring 2012: Multiple choice review questions for final exam. Exam will cover chapters on perfect competition, monopoly, monopolistic competition and oligopoly up to the Nash equilibrium
More informationHow To Calculate Profit Maximization In A Competitive Dairy Firm
Microeconomic FRQ s 2005 1. Bestmilk, a typical profit-maximizing dairy firm, is operating in a constant-cost, perfectly competitive industry that is in long-run equilibrium. a. Draw correctly-labeled
More informationAP Microeconomics Review
AP Microeconomics Review 1. Firm in Perfect Competition (Long-Run Equilibrium) 2. Monopoly Industry with comparison of price & output of a Perfectly Competitive Industry 3. Natural Monopoly with Fair-Return
More informationMULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
Test 2 Review Econ 201, V. Tremblay MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) Barbara left a $25,000 job as an architect to run a catering
More informationMULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
MBA 640 Survey of Microeconomics Fall 2006, Quiz 6 Name MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) A monopoly is best defined as a firm that
More informationQ D = 100 - (5)(5) = 75 Q S = 50 + (5)(5) = 75.
4. The rent control agency of New York City has found that aggregate demand is Q D = 100-5P. Quantity is measured in tens of thousands of apartments. Price, the average monthly rental rate, is measured
More informationAGEC 105 Spring 2016 Homework 7. 1. Consider a monopolist that faces the demand curve given in the following table.
AGEC 105 Spring 2016 Homework 7 1. Consider a monopolist that faces the demand curve given in the following table. a. Fill in the table by calculating total revenue and marginal revenue at each price.
More informationFixed Cost. Marginal Cost. Fixed Cost. Marginal Cost
1. Complete the following table (round each answer to the nearest whole number): Output Total Variable Fixed Marginal Average Avg. Var. Avg. Fixed 0 30 1 35 60 3 110 4 00 5 30 6 600 Output Total Variable
More informationChapter 8 Production Technology and Costs 8.1 Economic Costs and Economic Profit
Chapter 8 Production Technology and Costs 8.1 Economic Costs and Economic Profit 1) Accountants include costs as part of a firm's costs, while economists include costs. A) explicit; no explicit B) implicit;
More informationPractice Multiple Choice Questions Answers are bolded. Explanations to come soon!!
Practice Multiple Choice Questions Answers are bolded. Explanations to come soon!! For more, please visit: http://courses.missouristate.edu/reedolsen/courses/eco165/qeq.htm Market Equilibrium and Applications
More informationChapter 8. Competitive Firms and Markets
Chapter 8. Competitive Firms and Markets We have learned the production function and cost function, the question now is: how much to produce such that firm can maximize his profit? To solve this question,
More informationMarket for cream: P 1 P 2 D 1 D 2 Q 2 Q 1. Individual firm: W Market for labor: W, S MRP w 1 w 2 D 1 D 1 D 2 D 2
Factor Markets Problem 1 (APT 93, P2) Two goods, coffee and cream, are complements. Due to a natural disaster in Brazil that drastically reduces the supply of coffee in the world market the price of coffee
More informationTable of Contents MICRO ECONOMICS
economicsentrance.weebly.com Basic Exercises Micro Economics AKG 09 Table of Contents MICRO ECONOMICS Budget Constraint... 4 Practice problems... 4 Answers... 4 Supply and Demand... 7 Practice Problems...
More informationD) Marginal revenue is the rate at which total revenue changes with respect to changes in output.
Ch. 9 1. Which of the following is not an assumption of a perfectly competitive market? A) Fragmented industry B) Differentiated product C) Perfect information D) Equal access to resources 2. Which of
More informationLearning Objectives. After reading Chapter 11 and working the problems for Chapter 11 in the textbook and in this Workbook, you should be able to:
Learning Objectives After reading Chapter 11 and working the problems for Chapter 11 in the textbook and in this Workbook, you should be able to: Discuss three characteristics of perfectly competitive
More informationMonopolistic Competition
In this chapter, look for the answers to these questions: How is similar to perfect? How is it similar to monopoly? How do ally competitive firms choose price and? Do they earn economic profit? In what
More informationMODULE 62: MONOPOLY & PUBLIC POLICY
MODULE 62: MONOPOLY & PUBLIC POLICY Schmidty School of Economics 1 LEARNING TARGETS I CAN Ø Compare & Contrast the effect that perfect competition and monopoly has upon society's welfare. Ø Explain how
More informationchapter: Solution Solution Monopoly 1. Each of the following firms possesses market power. Explain its source.
S197-S28_Krugman2e_PS_Ch14.qxp 9/16/8 9:22 PM Page S-197 Monopoly chapter: 14 1. Each of the following firms possesses market power. Explain its source. a. Merck, the producer of the patented cholesterol-lowering
More informationFigure 1, A Monopolistically Competitive Firm
The Digital Economist Lecture 9 Pricing Power and Price Discrimination Many firms have the ability to charge prices for their products consistent with their best interests even thought they may not be
More informationMICROECONOMICS II PROBLEM SET III: MONOPOLY
MICROECONOMICS II PROBLEM SET III: MONOPOLY EXERCISE 1 Firstly, we analyze the equilibrium under the monopoly. The monopolist chooses the quantity that maximizes its profits; in particular, chooses the
More informationMULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
Chap 13 Monopolistic Competition and Oligopoly These questions may include topics that were not covered in class and may not be on the exam. MULTIPLE CHOICE. Choose the one alternative that best completes
More information4. Market Structures. Learning Objectives 4-63. Market Structures
1. Supply and Demand: Introduction 3 2. Supply and Demand: Consumer Demand 33 3. Supply and Demand: Company Analysis 43 4. Market Structures 63 5. Key Formulas 81 2014 Allen Resources, Inc. All rights
More informationMPP 801 Monopoly Kevin Wainwright Study Questions
MPP 801 Monopoly Kevin Wainwright Study Questions MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) The marginal revenue facing a monopolist A) is
More informationANSWERS TO END-OF-CHAPTER QUESTIONS
ANSWERS TO END-OF-CHAPTER QUESTIONS 23-1 Briefly indicate the basic characteristics of pure competition, pure monopoly, monopolistic competition, and oligopoly. Under which of these market classifications
More informationCHAPTER 9: PURE COMPETITION
CHAPTER 9: PURE COMPETITION Introduction In Chapters 9-11, we reach the heart of microeconomics, the concepts which comprise more than a quarter of the AP microeconomics exam. With a fuller understanding
More informationPure Competition urely competitive markets are used as the benchmark to evaluate market
R. Larry Reynolds Pure Competition urely competitive markets are used as the benchmark to evaluate market P performance. It is generally believed that market structure influences the behavior and performance
More informationMarket Structure: Duopoly and Oligopoly
WSG10 7/7/03 4:24 PM Page 145 10 Market Structure: Duopoly and Oligopoly OVERVIEW An oligopoly is an industry comprising a few firms. A duopoly, which is a special case of oligopoly, is an industry consisting
More informationA. a change in demand. B. a change in quantity demanded. C. a change in quantity supplied. D. unit elasticity. E. a change in average variable cost.
1. The supply of gasoline changes, causing the price of gasoline to change. The resulting movement from one point to another along the demand curve for gasoline is called A. a change in demand. B. a change
More informationEconomics 431 Fall 2003 1st midterm Answer Key
Economics 431 Fall 003 1st midterm Answer Key 1) (7 points) Consider an industry that consists of a large number of identical firms. In the long run competitive equilibrium, a firm s marginal cost must
More informationProfit Maximization. 2. product homogeneity
Perfectly Competitive Markets It is essentially a market in which there is enough competition that it doesn t make sense to identify your rivals. There are so many competitors that you cannot single out
More informationName Eco200: Practice Test 1 Covering Chapters 10 through 15
Name Eco200: Practice Test 1 Covering Chapters 10 through 15 1. Many observers believe that the levels of pollution in our society are too high. a. If society wishes to reduce overall pollution by a certain
More information1) If the government sets a price ceiling below the monopoly price, will this reduce deadweight loss in a monopolized market?
Managerial Economics Study Questions With Solutions Monopoly and Price Disrcimination 1) If the government sets a price ceiling below the monopoly price, will this reduce deadweight loss in a monopolized
More informationMULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
Chapter 11 Monopoly practice Davidson spring2007 MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) A monopoly industry is characterized by 1) A)
More informationEconomics 203: Intermediate Microeconomics I Lab Exercise #11. Buy Building Lease F1 = 500 F1 = 750 Firm 2 F2 = 500 F2 = 400
Page 1 March 19, 2012 Section 1: Test Your Understanding Economics 203: Intermediate Microeconomics I Lab Exercise #11 The following payoff matrix represents the long-run payoffs for two duopolists faced
More informationMarginal cost. Average cost. Marginal revenue 10 20 40
Economics 101 Fall 2011 Homework #6 Due: 12/13/2010 in lecture Directions: The homework will be collected in a box before the lecture. Please place your name, TA name and section number on top of the homework
More informationCOST & BREAKEVEN ANALYSIS
COST & BREAKEVEN ANALYSIS http://www.tutorialspoint.com/managerial_economics/cost_and_breakeven_analysis.htm Copyright tutorialspoint.com In managerial economics another area which is of great importance
More informationPrice Theory Lecture 6: Market Structure Perfect Competition
Price Theory Lecture 6: Market tructure Perfect Competition I. Concepts of Competition Whether a firm can be regarded as competitive depends on several factors, the most important of which are: The number
More informationPre-Test Chapter 21 ed17
Pre-Test Chapter 21 ed17 Multiple Choice Questions 1. Which of the following is not a basic characteristic of pure competition? A. considerable nonprice competition B. no barriers to the entry or exodus
More informationChapter 7 Monopoly, Oligopoly and Strategy
Chapter 7 Monopoly, Oligopoly and Strategy After reading Chapter 7, MONOPOLY, OLIGOPOLY AND STRATEGY, you should be able to: Define the characteristics of Monopoly and Oligopoly, and explain why the are
More informationRutgers University Economics 102: Introductory Microeconomics Professor Altshuler Fall 2003
Rutgers University Economics 102: Introductory Microeconomics Professor Altshuler Fall 2003 Answers to Problem Set 11 Chapter 16 2. a. If there were many suppliers of diamonds, price would equal marginal
More informationThus MR(Q) = P (Q) Q P (Q 1) (Q 1) < P (Q) Q P (Q) (Q 1) = P (Q), since P (Q 1) > P (Q).
A monopolist s marginal revenue is always less than or equal to the price of the good. Marginal revenue is the amount of revenue the firm receives for each additional unit of output. It is the difference
More informationUnit 2.3 - Theory of the Firm Unit Overview
Unit 2.3.1 - Introduction to Market Structures and Cost Theory Intro to Market Structures Pure competition Monopolistic competition Oligopoly Monopoly Cost theory Types of costs: fixed costs, variable
More informationECON 103, 2008-2 ANSWERS TO HOME WORK ASSIGNMENTS
ECON 103, 2008-2 ANSWERS TO HOME WORK ASSIGNMENTS Due the Week of June 23 Chapter 8 WRITE [4] Use the demand schedule that follows to calculate total revenue and marginal revenue at each quantity. Plot
More informationEcon Wizard User s Manual
1 Econ Wizard User s Manual Kevin Binns Matt Friedrichsen Purpose: This program is intended to be used by students enrolled in introductory economics classes. The program is meant to help these students
More informationEconomic Efficiency, Government Price Setting, and Taxes
CHAPTER 4 Economic Efficiency, Government Price Setting, and Taxes Modified by: Changwoo Nam 1 Economic Efficiency, Government Price Setting, and Taxes A legally determined maximum price that sellers may
More informationEcon 101: Principles of Microeconomics
Econ 101: Principles of Microeconomics Chapter 12 - Behind the Supply Curve - Inputs and Costs Fall 2010 Herriges (ISU) Ch. 12 Behind the Supply Curve Fall 2010 1 / 30 Outline 1 The Production Function
More informationCost OVERVIEW. WSG6 7/7/03 4:36 PM Page 79. Copyright 2003 by Academic Press. All rights of reproduction in any form reserved.
WSG6 7/7/03 4:36 PM Page 79 6 Cost OVERVIEW The previous chapter reviewed the theoretical implications of the technological process whereby factors of production are efficiently transformed into goods
More informationLong Run Supply and the Analysis of Competitive Markets. 1 Long Run Competitive Equilibrium
Long Run Competitive Equilibrium. rinciples of Microeconomics, Fall 7 Chia-Hui Chen October 9, 7 Lecture 6 Long Run Supply and the Analysis of Competitive Markets Outline. Chap 8: Long Run Equilibrium.
More informationFigure: Computing Monopoly Profit
Name: Date: 1. Most electric, gas, and water companies are examples of: A) unregulated monopolies. B) natural monopolies. C) restricted-input monopolies. D) sunk-cost monopolies. Use the following to answer
More information12 PERFECT COMPETITION. Chapter. Answers to the Review Quizzes. Page 275. Page 279
Chapter 12 PERFECT COMPETITION Answers to the Review Quizzes Page 275 1. Why is a firm in perfect competition a price taker? One firm s output is a perfect substitute for another firm s output and each
More informationOligopoly: How do firms behave when there are only a few competitors? These firms produce all or most of their industry s output.
Topic 8 Chapter 13 Oligopoly and Monopolistic Competition Econ 203 Topic 8 page 1 Oligopoly: How do firms behave when there are only a few competitors? These firms produce all or most of their industry
More informationChapter 22 The Cost of Production Extra Multiple Choice Questions for Review
Chapter 22 The Cost of Production Extra Multiple Choice Questions for Review 1. Implicit costs are: A) equal to total fixed costs. B) comprised entirely of variable costs. C) "payments" for self-employed
More informationCHAPTER 18 MARKETS WITH MARKET POWER Principles of Economics in Context (Goodwin et al.)
CHAPTER 18 MARKETS WITH MARKET POWER Principles of Economics in Context (Goodwin et al.) Chapter Summary Now that you understand the model of a perfectly competitive market, this chapter complicates the
More informationSOLUTIONS TO HOMEWORK SET #4
Sloan School of Management 15.010/15.011 Massachusetts Institute of Technology SOLUTIONS TO HOMEWORK SET #4 1. a. If the markets are open to free trade, the monopolist cannot keep the markets separated.
More informationMULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
Chapter 6 - Markets in Action - Sample Questions MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) The short-run impact of the San Francisco earthquake
More informationEquilibrium of a firm under perfect competition in the short-run. A firm is under equilibrium at that point where it maximizes its profits.
Equilibrium of a firm under perfect competition in the short-run. A firm is under equilibrium at that point where it maximizes its profits. Profit depends upon two factors Revenue Structure Cost Structure
More informationMULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) The four-firm concentration ratio equals the percentage of the value of accounted for by the four
More informationCE2451 Engineering Economics & Cost Analysis. Objectives of this course
CE2451 Engineering Economics & Cost Analysis Dr. M. Selvakumar Associate Professor Department of Civil Engineering Sri Venkateswara College of Engineering Objectives of this course The main objective of
More informationEcon 201 Lecture 17. The marginal benefit of expanding output by one unit is the market price. Marginal cost of producing corn
Econ 201 Lecture 17 The Perfectly Competitive Firm Is a Taker (Recap) The perfectly competitive firm has no influence over the market price. It can sell as many units as it wishes at that price. Typically,
More informationA Detailed Price Discrimination Example
A Detailed Price Discrimination Example Suppose that there are two different types of customers for a monopolist s product. Customers of type 1 have demand curves as follows. These demand curves include
More information1. Supply and demand are the most important concepts in economics.
Page 1 1. Supply and demand are the most important concepts in economics. 2. Markets and Competition a. Market is a group of buyers and sellers of a particular good or service. P. 66. b. These individuals
More informationPrinciple of Microeconomics Econ 202-506 chapter 13
Principle of Microeconomics Econ 202-506 chapter 13 MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) The WaveHouse on Mission Beach in San Diego
More informationN. Gregory Mankiw Principles of Economics. Chapter 15. MONOPOLY
N. Gregory Mankiw Principles of Economics Chapter 15. MONOPOLY Solutions to Problems and Applications 1. The following table shows revenue, costs, and profits, where quantities are in thousands, and total
More informationMikroekonomia B by Mikolaj Czajkowski. MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
Mikroekonomia B by Mikolaj Czajkowski Test 12 - Oligopoly Name Group MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) The market structure in which
More informationBEE2017 Intermediate Microeconomics 2
BEE2017 Intermediate Microeconomics 2 Dieter Balkenborg Sotiris Karkalakos Yiannis Vailakis Organisation Lectures Mon 14:00-15:00, STC/C Wed 12:00-13:00, STC/D Tutorials Mon 15:00-16:00, STC/106 (will
More informationQE1: Economics Notes 1
QE1: Economics Notes 1 Box 1: The Household and Consumer Welfare The final basket of goods that is chosen are determined by three factors: a. Income b. Price c. Preferences Substitution Effect: change
More informationVariable Cost. Marginal Cost. Average Variable Cost 0 $50 $50 $0 -- -- -- -- 1 $150 A B C D E F 2 G H I $120 J K L 3 M N O P Q $120 R
Class: Date: ID: A Principles Fall 2013 Midterm 3 Multiple Choice Identify the choice that best completes the statement or answers the question. 1. Trevor s Tire Company produced and sold 500 tires. The
More informationEcon 201 Final Exam. Douglas, Fall 2007 Version A Special Codes 00000. PLEDGE: I have neither given nor received unauthorized help on this exam.
, Fall 2007 Version A Special Codes 00000 PLEDGE: I have neither given nor received unauthorized help on this exam. SIGNED: PRINT NAME: Econ 201 Final Exam 1. For a profit-maximizing monopolist, a. MR
More informationChoose the single best answer for each question. Do all of your scratch work in the margins or in the blank space on the last page.
Econ 101, Section 1, F09, Schroeter Final Exam, Red Choose the single best answer for each question. Do all of your scratch work in the margins or in the blank space on the last page. 1. Pete receives
More informationINTRODUCTORY MICROECONOMICS
INTRODUCTORY MICROECONOMICS UNIT-I PRODUCTION POSSIBILITIES CURVE The production possibilities (PP) curve is a graphical medium of highlighting the central problem of 'what to produce'. To decide what
More informationBreak-even Analysis. Thus, if we assume that price and AVC are constant, (1) can be rewritten as follows TFC AVC
Break-even Analysis An enterprise, whether or not a profit maximizer, often finds it useful to know what price (or output level) must be for total revenue just equal total cost. This can be done with a
More informationFirst degree price discrimination ECON 171
First degree price discrimination Introduction Annual subscriptions generally cost less in total than one-off purchases Buying in bulk usually offers a price discount these are price discrimination reflecting
More information